Morning Report Friday 27 March 2015
I apologise that yesterday’s alert confused a number of subscribers. I sold all of my Santos (STO) call options, making a profit of over 25% in a few days. The reason for the sale below my price target in STO was that Oil has already rallied over 20% in 7 trading days, within a whisker of my target.
Don’t panic, BUT you shouldn’t ignore the warning signs
I received numerous emails yesterday concerning the surprising weakness in Australian equities, hence today’s note is an updated outline of exactly how I see Australian equities at present and in coming weeks/months.
Yesterday the market fell almost 100 points, but the noticeable standout was the banks, falling over 2% with no buyers in sight. When investors decide to abandon the “yield play”, we are likely to witness a number of consecutive aggressive down days as stocks, like the banks fall 10-15% very quickly – similar to May 2013. I do not believe that equities have yet topped out, but the warning signs are looming. Markets are already mentally factoring in two interest rate cuts for Australian in 2015, potentially a classic case of “the good news is in the market”.
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